China’s combative strategy, which is not supported by its actual military capabilities, risks more than it is likely to gain.

It does not matter how slowly you go as long as you do not stop. – Confucius

Thirty-five years ago, China launched a strategic policy of “peaceful rise.” Its goal was to foster Chinese economic development and growth in a fairly stable global environment. It worked. But now it has stopped.

In 2004, Premier Wen Jiabao said that China “will not…pose a threat to any other country.” Today, the Chinese leadership has abandoned the doctrine and is aggressively asserting China’s interests in the Asia-Pacific region. China is risking a military confrontation of destructive potential with several nations. Strategist Edward Luttwak characterizes this as “military adventurism.”

The new strategy makes little economic sense. China’s leading trading partners include the United States, Japan, South Korea, India and Taiwan. The US is also China’s most important borrower. Yet, China has chosen to threaten all its best customers at the same time.

Last April, China occupied Indian territory in Ladakh. More recently, China has extended its territorial claims to the waters of the East China Sea, challenging Japan over the Senkaku/Diaoyu islands. It is squabbling with South Korea over a submerged rock in the Yellow Sea and the airspace above it. China has also trampled the maritime interests of Vietnam, Malaysia, Brunei, Indonesia and the Philippines in the South China Sea.

In December, the Chinese navy took on the United States directly. A much smaller Chinese vessel attempted to block the path of a 9,000-ton US Navy guided missile cruiser, the USS Cowpens, in the South China Sea. The Chinese ship crossed within 100 yards of The Mighty MOO’s bow.

What strategic advantage China thinks it possesses or hopes to acquire is unclear. The real danger is that there is poor strategic thinking behind China’s actions. It is likely China is grossly overestimating its ability to project military power, while simultaneously underestimating the capacity of its neighbors to inflict humiliating defeat. China is not acting strategically so much as it is speculating on the likelihood of a response from its antagonists.

Sino-Japanese tensions were a major theme at the World Economic Forum meeting in Davos this month. “An influential Chinese professional” shocked a collection of fellow Davos denizens by expressing the opinion that a military conflict between China and Japan over the Senkaku/Diaoyu islands “is inevitable.” Henry Blodget reported on the event.

“China and Japan have never really put [World War II] behind them,” Blodget wrote. He continued: “[The professional] said that many in China believe that China can accomplish its goals…by sending troops onto the islands and planting the flag. …[A] limited strike could be effected without provoking a broader conflict” involving China’s neighbors and the US.

Change the wording a bit and the Davos story sounds less like the tale of a triumphant China seizing unchallenged its rightful place on the world stage and more like a reinterpretation of Argentina’s brief seizure of the Falkland Islands from Great Britain in 1982. Chinese leaders are surprisingly blind to the similarity.

The Financial Times calls this “lunacy,” but it is Chinese military doctrine. Retired US Rear Admiral Michael McDevitt said last year, “China claims ‘if you act diplomatically to challenge our sovereignty….we have the right to preemptively attack as part of our active defense strategy.’”

A quick SWOT analysis might show China’s goals and strategies are not aligned with its capabilities and opportunities. Clearly, China sees opportunities for gain in the strategy it is pursuing. But its military strengths are not useful for taking and holding islands remote from their mainland bases, especially in the circumstances they face in the East China Sea. Its military weaknesses begin with its navy, which is no match for Japan’s, much less for the US Navy. The USS Cowpens alone carries an arsenal sufficient to destroy much of China’s fleet.

The risks of the situation, and its costs, seem much larger than China reckons. For whatever reason, China is discounting them heavily. Besides the threat to its military, China’s export-dependent economy has slowed by nearly half since 2007. GDP growth is flattening out at its lowest rate in 15 years. Like the Argentine junta, Chinese leadership is taking great risk for what by comparison are limited gains.

Reflecting on his experience as a leading policy expert on the Soviet Union, US Ambassador Charles Bohlen ended his diplomatic memoir, Witness to History, with two memorable lines: “I do not think we can look forward to a tranquil world so long as the Soviet Union operates in its present form. The only hope, and this is a fairly thin one, is that at some point the Soviet Union will begin to act like a country instead of a cause.”

Ambassador Bohlen was prescient. Forty years later, his concerns about the first Communist empire apply just as aptly to the sole surviving member of that endangered species.

No strategic purpose is served by China’s simultaneously taking on its neighbors. The costs are higher than China supposes. Unless it changes course, China will make a fundamental strategic error.

Author:Steven Slezak

Steven Slezak is on the faculty at Cal Poly in San Luis Obispo, California, teaching finance, strategy, and risk management. His research is supported by the university’s Farm Credit Program in Finance and Appraisal. Previously, he taught financial management and financial mathematics at the Johns Hopkins University MBA program. He holds a degree in Foreign Service from Georgetown University and an MBA in Finance from JHU. He has worked in fields as diverse as international economics, national security, commodities trading, and risk management. He consults on business management and strategy.